Barriers to Affordable Rural Housing

Housing options in rural America are too expensive, are of poor quality, or are inaccessible to many low-income families. Because of higher, more persistent levels of poverty and limited access to affordable mortgage credit, rural communities often struggle to meet the housing needs of its residents.

Barriers to Affordability

Although housing costs are generally lower in rural communities, lower incomes and higher poverty rates make housing options simply unaffordable for many rural residents. In 2010, rural median incomes ($40,038) were 20 percent lower than the national median income ($50,046), and more than 23 percent less than median urban incomes ($51,998). In the aftermath of our recent economic crisis, the U.S. poverty rate was at its highest level since 1993 at 15.1 percent. The rural poverty rate was even higher — at 16.5 percent.

It should be no surprise, therefore, that rural communities are four times more likely than urban areas to have at least 20 percent of their population living in poverty.

Poor Quality Housing

Rural low-income families are often limited to poor quality housing. Homes that are available are often in need of extensive repair or improvements to just meet basic health and safety levels. Rural homes are more likely to be in substandard conditions. In fact, nearly six percent of rural homes are either moderately or severely substandard, without hot water, or with leaking roofs, rodent problems, or inadequate heating or plumbing systems.

Recent research confirms the broad health and economic impacts of substandard housing conditions. Poor housing conditions contribute to signficant health problems — including infectious and chronic diseases, injuries, and poor childhood development. Children living in substandard housing are more likely to develop serious illnesses like asthma and lead poisoning, negatively affecting their educational achievement. One study conservatively estimated the cost of illness, disease, adn disability attributable to substandard housing at $95 million each year.

Lack of Access to Afforable Credit

The lack of access to mortgage credit severely limits options for decent, clean, and affordable rural housing. Rural communities have more limited access to credit than urban areas. In addition, rural areas experience higher banking concentration than urban areas, resulting in less competition and consumer choice, higher prices, and ultimately, less access to affordable mortgage loans.

Even in those communities that do have a bank presence, however, low-income rural families still struggle to access affordable mortgages. Compared to the U.S. Department of Agriculture’s Rural Housing programs, local banks are often unable to provide low-income borrowers — many of whom do not have enough savings to contribute a large down payment — with the low-cost mortgages they need.